Release Date: September 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: You have a backlog of $13 million. Can you give us any color on the product mix? And will this backlog ship this calendar year? A: About half of the backlog is FlightWave Edge 130 Blue. We are hoping to ship a significant portion of that backlog by the end of the calendar year. We are transitioning from our old fiscal year into a calendar year and are working hard to build and ship drones to prepare for 2025.
Q: Can you talk about the mix involved in the $55 million guidance for calendar 2025? A: FPV drones are expected to contribute $5 million to $8 million due to their low cost. The remaining revenue will be split approximately 50/50 between the Teal 3 and the Edge 130 Blue. We have been conservative with our previous guidance and have done well.
Q: Can you discuss the margin profile at the $55 million revenue run rate? A: We expect to steadily increase margins as we produce the Teal 3 over a longer period. Not having to change production lines will allow us to rapidly achieve 50% margins.
Q: How much capital might you need to get to profitability? A: We raised approximately $8 million in debt, which we expect to get us to January or February. This timing is crucial as it aligns with when we would receive funds for large production contracts. The debt has no repayments for six months and includes warrants with a 30% coverage at a $6.50 exercise price.
Q: Do you have any sense of when the SRR announcement will be made? A: We expect the announcement could happen from early October to the AUSA show. The first year of deliveries between May and September 2025 is approximately $79 million.
Q: How does SRR tie in with potential NATO orders? A: SRR and NATO contracts do not rely on each other. We are close to receiving initial orders from some NATO countries, which typically start with 100-200 systems before larger buys. We are optimistic about both SRR and NATO contracts.
Q: Are the financials combined with FlightWave, and why did you choose a calendar year instead of a government fiscal year? A: FlightWave will be included in the financials reported as of October 31. We chose a calendar year to align better with the timing of government contract finalizations and budget amendments, which typically occur around December or January.
Q: Can you provide more details on the recent debt deal? A: The debt deal includes $8 million in proceeds with no repayments for six months. The warrants have a 30% coverage and a $6.50 exercise price, potentially generating an additional $4.9 million in proceeds.
Q: What is the expected timeline for combining FlightWave's financials with Red Cat's? A: FlightWave's financials will be included in the report for the period ending October 31, which will be filed in mid-December. This report will cover September and October activities.
Q: Why did you choose to change the fiscal year to a calendar year? A: Changing to a calendar year provides better visibility and consistency for our company, aligning with the typical timing of government contract finalizations and budget amendments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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